On April 23, 2021 Winning Brands management posted its Annual Report for the year ending December 31, 2020. Contained in that April report was a section dealing with subsequent developments, charting a course for future growth.
It was announced therein that negotiations had begun to add a new Tech Division to Winning Brands, by means of the acquisition of pertinent business elements from a trustee. This was the key to providing Winning Brands shareholders with increased intrinsic shareholder value: acquiring something important for WNBD shareholders at a substantial discount to its normal value. This is a formula already used successfully in many business sectors, including real estate and general industry. This method has proven to be a significant source of gain to purchasers able to make such arrangements. The negotiations for this particular transaction, between Winning Brands and the parties involved in the Tech Division, span two years and are now leading to a fruitful conclusion. The technology is perfectly positioned to capitalize on certain major trends in society that are manifesting, and likely to continue, as far as can be reasonably predicted. This longevity and breadth of relevance is a key feature of the value of this technology to the shareholders of Winning Brands now, and into the future.
The background to the purpose and circumstances of this acquisition by Winning Brands was provided to shareholders starting in April 2021, within the limitations of non-disclosure obligations. Further updates have been provided subsequently.
The link to the original Annual Report, is here: https://www.otcmarkets.com/otcapi/company/financial-report/279668/content
A theme running through the subsequent shareholder updates has been the preference by Winning Brands management to have formal court sanctioning of the acquisition that it is now making, by way of a vesting order. This would give Winning Brands’ acquisition legal finality and freedom from legacy claims against the assets that are being purchased by Winning Brands.
Management discipline was required to resist the temptation of announcing completion of the transaction prior to the issuance of a court vesting order. Pressures existed in the relationship between Winning Brands and its shareholders in this regard. In the end, management opted for the protection of shareholders’ long term interests, considering this protection to be more important than a short term spike of publicity, followed by uncertainty. Premature announcement of completion would have created mass confusion amongst the existing client companies of the acquisition target, that target’s creditors and even the court.
I am pleased to report, that the court with special jurisdiction in this matter has added the vesting order hearing to its docket, including a court date. For this reason, Winning Brands will be in a position to finally and formally announce the completion of this transaction prior to February 15th, to be accompanied by a vesting order that will confer ownership to Winning Brands of the Tech Division assets being purchased. The matter has now been formally received into court processing, and this timing is provided by the court itself.
A non-disclosure obligation still exists, both as a legal obligation and as a practical matter. However, the following can be stated:
- To the best knowledge of WNBD management, and the attorneys representing both sides of the transaction, the transaction is non-contentious and is expected to be completed with the consent of all affected parties.
- The intellectual property rights include, amongst other things, protection under dozens of patents by license agreement, and will transfer to, and vest into Winning Brands.
- A subsidiary to Winning Brands will now be created within the coming 6 weeks in readiness to receive these patent rights, physical assets, goodwill, commercial rights, etc (such as are useful to Winning Brands).
- The subsidiary will be majority owned by Winning Brands. The minority interest in the subsidiary will be used to convey economic opportunity to existing management and staff of the Tech Division, its former lenders, and to provide an additional basis of financing for the Tech Division’s growth going forward that is not dilutional to WNBD stock.
- The subsidiary will be able to carry on business from inception under Winning Brands ownership because the Tech Division has existing commercial clients. These customers are of significant stature, located in North America, Europe, the Middle East and Japan. For this reason, Q1 2022 Winning Brands reported sales will include new contributions from the Tech Division.
- Winning Brands shareholders will be given a full briefing as to the business of the Tech Division, its management, its technology, customer profiles, and its Technology Division’s immediate growth opportunities following the vesting order.
- Contrary to shareholder concerns, the Tech Division will not be inheriting legacy debt. The court vesting order will provide unencumbered ownership of the rights and assets in question to Winning Brands
